This document discusses different types of leasing agreements. It defines leasing as a written contract where an asset owner grants exclusive use of the asset to a second party for a specified period in exchange for periodic rental payments. The main types of leases covered are financial leases, operating leases, sale-and-leaseback, leverage leases, and cross-border leases. Financial leases transfer ownership at the end of the lease term, while operating leases do not. Sale-and-leaseback involves selling an asset and leasing it back. Leverage leases involve a third-party lender. Cross-border leases involve parties in different countries. The document also notes challenges like unhealthy competition and need

1. Presented by
Prashant Arsul
Recent Trends in Leasing

2. What is Leasing
Written contract by which an owner of a specific asset
grants a second party the right to its exclusive
possession and use for a specific period and under
specified conditions, in return for specified periodic
rental or lease payments.

3. Terms
 Lessor – owner of the asset.
 Lessee – Person/Party that uses the asset.
 Rent/Lease payment – amount paid by the lessee to the lessor
against the use of the asset.
 Lease Period: Legal period where Lessee is authorized to use the
asset
 Lender – Provides loan incase the asset value is beyond the
purchasing capacity of the lessor

4. Leasing
Asset
Lessee/
User
Rent
Lessor/
Owner

5. Traditional Types of Lease
1. Financial Lease
2. Operating Lease
3. Sale and Leaseback
4. Leverage Lease
5. Cross Boarder Lease

6. Financial Lease
 It’s a full pay-out, non-cancellable agreement.
 Lessee is responsible for maintenance, taxes
and insurance.
 Lessee wants the ownership and expects high
residual value of the asset.
 Lessee purchases the asset upon lease
termination at the agreed value.
 Lease tends to be longer as much as it covers
the full life of the asset.

7. Operating Lease
 It runs for less than full economic life of the asset.
 Lessee is not liable for the financing of its value.
 Lessor carries the risk associated with the
residual value of the asset.
 Opted by companies that frequently update or
replace equipment.
 Also incase where lessee does not want to take
the ownership.

8. Sale and leaseback
 Lessee sells presently owned asset to the
lessor.
 Lessor allows the lessee to retain the full use of
the property for a fee over a specified period of
time.
 Lessee losses the ownership but retains the
possession of the asset for its use.
 Opted by the companies that wants to convert
the presently owned asset into cash but also

9. Leverage Lease
 Here additional third party involved known as
‘Lender’.
 Lessor puts up some of the money required to
purchase the asset and borrows the rest from the
lender.
 Lender is payed the secured interest on the asset.
 Lessee makes the payment to lessor, who makes
the payment to the lender.
 Lender has a right to the asset and the lease
payments ( if the lessor defaults).

10. Cross-boarder Lease
 Here lessor and the lessee are situated in two
different countries.
 Opted by companies that want to acquire asset
from other country but could not finance it.
 To reduce the overall cost of financing through
utilization of tax depreciation allowances to reduce
its taxable income.

11. Players in Leasing:
Lessor Lessee
 Specialized Leasing
Companies
 Banks and Bank
Subsidiaries
 Specialized Financial
Institutions
 One-Off Lessors
 Public Sector
Undertakings
 Mid-Market Companies
 Retail Consumers
 Car Customers
 Commercial Vehicles
 Earth Movers Machinery
Consumers
 Govt. Departments

12. Current Status
Unhealthy Competition
Lack of Qualified personnel
Tax consideration
Stamp duty
Delayed payments and bad debts

13. Conclusion
 Many industrialist are tempted to go for leasing
due to ease of availability
 Car companies are the good example of good
leasing business
 Competition must be on equal scale.
 Government, financial institutions and leasing
companies should join hands.
 Considering the industrial growth, leasing has got
huge potential to grow.

14. Thank You